Stock Exchange Info

Struggling bank stocks keep market muted

Dhaka stocks inched up for the second day in the new year on Thursday as struggling bank scrips kept the market muted.

DSEX, the prime index of Dhaka Stock Exchange, advanced by 0.13 per cent, or 6 points, to close at 4,459.29 points on Thursday, after inching up by 0.35 points on Wednesday.The DSEX increased by 69 points in last five trading sessions.

The market started Thursday’s session upbeat, but failed to keep the momentum for long and ended the session with a slight gain as banks continued falling, market operators said.

They said a section of investors kept buying undervalued shares after the market hit bottom in recent months.The investors expected that the market might turn around in the new year, they said.But, the banks halted the upward trend as investors remained concerned about the possible impact of 9 per cent lending rate on the banks’ financial health, they said.

Finance minister AHM Mustafa Kamal on Monday announced that the banks on April 1 would implement 9 per cent lending rate for all sectors instead of only industrial manufacturing sector.The investors apprehended that the move could eventually curb the banks’ profit making ability.

The government’s pressure to cut lending rate is also worsening credit flow to the private sector, market operators said.A non-stop surge in non-performing loans would eat into banks’ revenue as the entities have to keep provision against the bad loans from their profits, they said.

Moreover, the media reported that the foreign investors continued pulling funds out of the market for the second year in 2019 that made investors more nervous on the trading floor.

Although the share prices hit bottom, many of the investors hesitated to inject fresh funds in the market as they could not see any positive sign in the country’s financial sector.The market lost around 1,500 points in last 11 months’ rout that eroded almost Tk 80,000 crore in market capitalisation.

EBL Securities in its daily market commentary said, ‘The market started positive on Thursday, but could not sustain the vibe and inched up marginally at the end as the bank sector dropped worryingly over the government move to stabilise interest rate and soaring provision for bad loans.’

Investors continued selling shares of sectoral giants, which wiped out the early gain in spite of the investors’ active participation on Thursday, it said.The average share prices of bank and general insurance sectors plunged by 1.3 per cent and 1.0 per cent respectively.

The share prices of textile, energy, non-bank financial institution and telecommunication advanced by 0.8 per cent, 0.7 per cent, 0.5 per cent and 0.48 per cent respectively.Turnover on the DSE increased to Tk 386.82 crore on Thursday from Tk 296.30 crore in the previous trading session.

Out of the 343 scrips traded on Thursday, 167 advanced, 137 declined and 49 remained unchanged.Shariah index DSES also added 0.57 per cent, or 4.33 points, to end at 1,506.12 points.DSE blue-chip index DS30, however, gained 0.28 per cent, or 4.33 points, to close at 1,506.12 points on the day.

Khulna Power Company led the turnover chart with its shares worth Tk 20.64 crore changing hands on the day.

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